1 Good morning and thank you Mike, for that kind welcome. And thank you to the
Chamber for the great work you do in advancing commerce ties between Australia
and the US. A couple of years ago we acted on your mission and created a joint
venture with the US retail company Lowe’s. It’s a great partnership but one where
the business results are really just an outcome of our shared values and culture.
We’ve learned a lot from them but they’ve also learnt a lot from Australia – so we
think it’s a pretty good working model.
It’s a pleasure to be here today and to have the opportunity to talk to a captive
audience about my number one passion in life – retail. Last year I had the great
fortune to be appointed as CEO of the company I’ve worked for the last twenty five
years.
It’s an honour to be leading a retail organisation that is close to a century old and
one that has seen such phenomenal change in its lifetime.
Computerisation, supply chain advances, manufacturing innovations and major
consumer lifestyle changes have all reshaped the face of retailing. I mean, back in
1924, if you had told our founders that a future key growth category would be water,
they’d have probably laughed you out of the store!
But at its essence, retail hasn’t really changed all that much in thousands of years.
A buyer’s need drives a retailer’s commercial acumen.
It was very telling that during the gold rush, the people who really made the money
weren’t the fossickers, they were the people who sold them the shovels.
And while the true essence of retail will always stay the same, it will continue to
reshape itself. And that’s what’s happening right now. At this moment, we’re on the
cusp of a major evolution in retail as the balance of power shifts firmly to the
consumer.
More than ever before, the consumer is in the driving seat of our business. It’s a
global marketplace and the tools of trade for that global marketplace now fit literally
in the palm of your hand. Retailers are taking full advantage of a global market to
secure stock at cheaper prices, to parallel import, to find innovations and capitalise
on talent. Suppliers also need to be increasingly globally competitive, not just
domestically competitive. So I for one, would never condemn my own customers
for trying to get the same advantages.
A new shopping revolution is occurring all around us and it’s tremendously exciting.
In this new era customers will have more shopping options than at any point in
history. Some call it multichannel but we are increasingly calling it multi-option
retailing and it’s a time when Woolworth’s customers can choose from the widest
range of well-priced, quality groceries and goods, in stores tailored to meet their
needs -- by size, location and offering.
A time when customers will have the freedom to choose when, how and where they
want to shop – on their phone on a bus, on an Ipad while waiting for a train, on a
2 computer during a coffee break, at home, at work, on holiday... ultimate choice and
ultimate convenience, using all available technologies to ease their way to and
through the shopping experience. It’s not a choice between online and bricks and
mortar – it’s about how they work seamlessly together, integrating different store
formats, sources of information and technology channels.
Consumers can now shop for what they want, when they want, in the way they want.
They’re still driven by the same things – by convenience, by value and by choice –
but convenience now means having goods delivered to your door at a time that suits,
value now means comparing prices from retailers around the world to get the best
deal, and choice now means having the latest fashion hot off the Milan catwalk, not
waiting 3 months until it filters down to Australia.
In the last eighteen months we’ve heard a lot of complaining from many of my fellow
retailers who seem terrified about the online monster lurking under their beds –
costing them jobs, sales and profit margins. Much of the conversation has focused
on the question of the GST threshold on imported goods. Yet the savings available
to consumers on many products can far outweigh the current GST threshold, making
this point rather irrelevant. Maybe the solution isn’t to fix the GST on imported
goods, maybe the solution is to lower your prices to a point where the consumer can
actually have some trust again. The last thing Australians need is retailers calling for
more taxes! It’s nonsense.
Some retailers have been dragged kicking and screaming into the multi-option age
and are at least exploring some avenues. But such recalcitrance hardly inspires
confidence and it certainly does nothing to suggest they are actually putting their
customers at the heart of their business strategies.
In my view, giving customers multiple options isn’t a threat, it’s a huge opportunity,
probably the biggest opportunity in retail for a hundred years. And if you can’t
recognise that then you need to question your own future. Retailers need to stop
complaining and start innovating or they risk being left on their own shelf by their
own customers. Bricks and mortar alone is no longer enough.
Yes, Australia has been somewhat slower off the mark than other countries but we’re
catching up fast and we have a highly-engaged population who are desperate for
change and a government which is investing heavily in online infrastructure. We
also have the benefit of learning from the mistakes other retailers have made along
their journey and we know the pot holes to avoid.
Multi-option retailing is one of my key strategic priorities for Woolworths. We are
already Australia and New Zealand’s largest online retailer, and it something that our
entire business is well and truly embracing. It is underpinned by our vision to put
customers at the heart of our business, supported by three clear planks –
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First, growing our core business to better serve our customers with fresh
range, choice and value,
3 -
second, pursuing new areas of growth to meet changing customer needs and
provide innovation,
and third, optimising the best retail talent in the world to truly deliver for our
customers.
Multi-option arches across all of those strategic planks, providing opportunity in our
core business, providing new growth opportunity and influencing the type of retail
talent we need to recruit and foster. So why is it so attractive to a retailer whose
major assets are real world stores? Well the evidence speaks for itself.
Through our Everyday Rewards card data, we know that a customer who shops both
online and in-store is up to 70% more valuable to us than a customer that only shops
in-store or only shops online. That integrated model, where the customer can
switch seamlessly from bricks and mortar to mobile is absolutely critical. They
already trust the brand, they just want to shop, source information and communicate
in a way that suits them the most.
So that might mean browsing online and picking up in store or buying online but
returning goods to store. Or just about any other permutation. But all channels are
interdependent – they are all representative of your brand and you have to maintain
investment in each of them equally.
Last week our Director of Supermarkets, Tjeerd Jegen launched an upgrade for our
supermarket mobile app so it connects direct to online shopping. So now you can
scan all your groceries in your pantry and with one swipe, order, pay and have them
delivered right to your kitchen bench top.
And the opportunities are endless. We also ran a trial at Town Hall station here in
Sydney, with 250 products posted on a wall that you can scan with your smart
phone. It’s a great novelty at the moment but it does give you a sense
of the incredible possibilities.
We envisage an era where Woolworths customers can order a leg of organic Cowra
lamb, direct from the supplier, delivered to their train station for collection on their
way home at 5pm.
Or where BIG W customers complete their entire Christmas toy shopping from the
lunchroom of their remote mine site, and it’s delivered wrapped for collection to their
car at Perth airport on Christmas eve.
Or a Dan Murphy’s customer who loves to browse in store to access the knowledge
of expert staff (and have a wine tasting or two!) but then places their order online for
home delivery at a time to suit them.
Who knows, maybe our supermarkets of the future are entirely smart phone selfsufficient with customers scanning and paying for their own groceries on their phone
with no need to go through a checkout. The imagination can really run riot and for
retailers with vision, the sky’s the limit.
4 Our liquor business is a great example of how a multi-option approach has been
working for years. We started off with three clear bricks and mortar formats – in
many cases it’s the same customer but each is suited to different shopping
occasions. Woolworths Liquor is the one stop option adjacent to our supermarkets.
BWS is what we call a super convenience high street offer where you can grab a six
pack on your way out for the night. And then there’s our big box offer Dan Murphy’s
with a huge range and best-value guarantee.
We then bought Langtons fine wine online auctioneers to give us access to the super
premium end of the market, then Cellarmasters which added significant direct
marketing and online capability. We launched Dan Murphy’s online last year,
building up a substantial and highly loyal social media following at the same time.
All of these channels integrate and they all have a very clear and well-defined
purpose for the customer, covering every segment, every type of channel and every
shopping requirement.
This type of model isn’t new to us and in liquor it isn’t dependent on any single
format. It’s working fantastically well and as new technology arises, we can plug it in
and continue to build.
We are aggressively pursuing innovation and integration and are working towards
making our entire business multi-option by 2015 with an ambitious target to reach $1
billion in online sales by the end of 2014. And that’s not just through groceries. We
now have a daily deals site called Door Busters, a direct wine business in
Cellarmasters and will soon launch the country’s first home improvement online store
when Masters, our brand new home improvement chain, goes live.
In fact by 2020 I believe 100% of our turnover will emanate from our multi-option
approach with customers having accessed at least one online touch point before
making their final transaction.
Now some other commentators have suggested the advent of multi-option retailing
will have a negative impact on Australian jobs. This is simply not true. Retail has
always been and will always be a highly people-focused industry. But the nature of
those retail jobs is changing somewhat and multi-option is a major driver of that
change.
Rapid technological advances are changing the way we work – retail has always
been about fulfilment at its most basic level – moving goods from A to B to ensure
they’re in the right place at the right time in the right quantity to meet the customer’s
needs. But in the future multi-option world, fulfilment will be the real engine room of
our business, with increasing levels of sophistication.
Woolworths of course, has built up considerable expertise in supply chain fulfilment
and is now embarked on a next generation upgrade to take our productivity to the
next stage of success.
Integrating multi-option retailing to our traditional bricks and mortar supply chain
systems is a key part of this next phase of development and something we’re
5 extremely focused on. It’s with very good reason that Penny Winn recently returned
to Woolworths to take on the dual role of Director of both multi-option and logistics.
They are two faces of the same coin. Penny’s goal is to help Woolworths deliver the
logistics piece that will make online work. In practice that will mean moving from
truckloads to more single loads; from B-doubles to small efficient vans. Our ability to
further leverage our supply chain as one of our key strengths gives us a running start
in multi-option fulfilment and will be critical in keeping us ahead of the game in this
new era.
At the end of the day, retail is actually about connecting customers to the goods they
want in a way that best suits them – that might be driven by convenience such as
shopping from your mobile or by the need for personal expert service like you find at
Masters – but regardless of whether retailing is happening behind the scenes or front
and centre of the store, there will always be a need for people.
Jobs aren’t replaced by technology, they just change as a result. Woolworths is an
employer of 192,000 people and the creation of new jobs and development of talent
remain a critical plank for us. In fact in November we announced we would be
creating 10,000 new jobs this current financial year just from new stores and
distribution centres. And that number will continue to grow in years to come. Our
new Masters stores alone will create upwards of 4,000 jobs a year for the
foreseeable future – jobs for people from diverse backgrounds, jobs for people who
have been out of the workplace for some time, jobs for older workers with a lifetime
of experience and maturity to offer. It makes me really proud to walk those stores
and talk to those new staff members who all have a story to tell about how they got
there and how much they value the opportunity.
I personally know the real value of being given a chance and retail is an industry
where an entry job can quickly become a lifetime career and the gateway to
incredible opportunity. I started my working life as an apprentice electrician, working
nightfill at Woolies in Tasmania to support my young family. I worked my way up
and was fortunate to be noticed but I’m living proof that you really can go from the
shopfloor to the boardroom.
But that’s the great thing about retail, regardless of the opportunity you’re looking for
– a casual after school first job, a part time office job once the kids are older, a
lifelong career, a professional role or a technical skill – there’s something for
everyone in a retail environment. And the more you can bring an understanding of
new technology, of how customers want to shop and what they expect to get from
their retailer in a new era, the more we want you in our organisation.
My commitment to jobs and opportunity has three areas of focus. First, we need to
match up the many thousands of job opportunities that exist at Woolworths, with
people who need and want work - no matter where they are in the country. Second,
I want to increase our diversity profile to ensure our business mirrors the spectrum of
society that we serve everyday. So as well as our commitment to creating jobs for
indigenous Australians, I’m also keen to include greater participation from people
with disabilities, older workers and the long-term unemployed. Third, I want to
6 improve access to training and skills development so that people can maximise all
the opportunities offered by a long term retail career – exactly as I myself have done.
We are on the cusp of exciting change in retail as we enter the new era where the
customer is in charge. But far from being daunted by change, I firmly believe it
brings opportunity for our business, our employees, our suppliers and of course, our
customers. You just have to look for that opportunity.
Woolworths is leading this shopping revolution in Australia and there’s a lot more
opportunity still to be realised.
We are constantly looking for innovation and new ways to move ahead and grow our
business. And that’s why we will always need good people, why we need to show
the world that retail has a vital future, with new career opportunities. We need to
attract the very best talent into an industry with a very exciting future – a future that
looks very different but one that will hold even more opportunity than in the past.
Thank you